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Stocks extended their downtrend yesterday, but they rebounded and closed positive. So was it an upward reversal or just another upward correction?

The S&P 500 index gained 0.57% on Monday after falling to the daily low of 4,062.51. It was the lowest since last year’s May. The market reacted to the quarterly earnings, poor economic data releases, Fed’s monetary policy tightening plans and Ukraine conflict. Stocks reversed their intraday decline and it may look like a more permanent reversal. However, there have been no confirmed positive signals so far. This morning the S&P 500 index is expected to open 0.2% higher and we may see a consolidation ahead of tomorrow’s important Fed’s interest rate decision release.

The nearest important resistance level is now at around 4,200-4,250. On the other hand, the support level is at 4,050-4.100, marked by the local low. The S&P 500 index extended its four-month-long downtrend, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract – Consolidation Following Bounce

Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it fell below the 4,100 level, but it quickly retraced the decline. This morning it is trading within a consolidation along the 4,150 level.

On Thursday before the opening of the cash market we decided to open a speculative long position. We are still expecting an upward correction from the current levels. (our premium Stock Trading Alert includes details of our trading positions along with the stop-loss and profit target levels). (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index will likely open 0.2% higher today and we may see a consolidation following yesterday’s rebound. There’s a lot of uncertainty concerning tomorrow’s Fed’s release. Friday’s and yesterday’s panic may suggest that at least a short-term bottom may be in sight.

Here’s the breakdown:

• The S&P 500 index extended its downtrend yesterday, but it closed higher.
• We are still expecting an upward correction from the current levels.

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Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

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Available to premium subscribers only.

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Available to premium subscribers only.

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The S&P 500 index slightly extended its downtrend yesterday, but at the end of the day it was higher. So was it a reversal or just another short-term bounce?

The broad stock market index gained 0.21% on Wednesday, after bouncing from the new local low of 4,162.90. The S&P 500 fell to its March local lows of around 4,160. It extended the downtrend despite quarterly corporate earnings releases. There’s still a lot of uncertainty concerning the Fed’s monetary policy tightening fears and Ukraine conflict. This morning the S&P 500 index is expected to open 1.1% higher following yesterday’s FB quarterly earnings release. However, the market retraced some of its overnight advance after much worse than expected quarterly Advance GDP data release (-1.4% vs. expectations of +1.1%).

The nearest important resistance level is now at around 4,200-4,250. On the other hand, the support level is at 4,100-4,150, marked by the previous lows. The S&P 500 index retraced the whole March advance, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Above 4,200 Again

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Tuesday the market fell to its previous local lows of around 4,140, and yesterday it bounced back above the 4,200 level again.

The market is technically oversold and there are some positive trend exhaustion signals. Therefore, we are expecting an upward correction from the current levels (our premium Stock Trading Alert includes details of our trading positions along with the stop-loss and profit target levels). (chart by courtesy of http://tradingview.com):

Conclusion

On Wednesday, the S&P 500 index fluctuated following its recent declines. The market closed higher, but it was still below the 4,200 level. Today, the important Advance GDP release was much worse than expected. However, we may see a “sell the rumor, buy the news” action here. Investors will also wait for today’s important quarterly earnings releases from AAPL and AMZN.

Here’s the breakdown:

• The S&P 500 index remained below the 4,200 level yesterday; it may be counterintuitive, but today’s worse than expected Advance GDP release may trigger an upward reversal.
• We are expecting an upward correction from the current levels.

Today's premium Stock Trading Alert includes details of our trading position. Interested in more exclusive updates? Join our premium Stock Trading Alerts newsletter and read all the details today.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

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